Prairie canola basis to continue improving

Commodity News Service Canada — Canola basis levels in Western Canada are already looking better than year-ago levels, but they’re expected to continue improving, Bruce Burnett said during a presentation at the Cereals of North America conference in Winnipeg.

Ending stocks in 2014/15 are predicted at around 911,000 tonnes by CWB, as demand remains strong and production is expected to drop from last year. At the end of 2013/14, stocks of canola were at 2.363 million tonnes, Statistics Canada data shows.

CWB predicted exports of canola at 8.7 million tonnes for 2014/15 and estimated Canadian canola production at 14.863 million tonnes, below the current Statistics Canada estimate of 14.080 million tonnes. In 2013/14, 17.966 million tonnes of canola were grown in Canada.

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The relatively tight fundamental situation won’t necessarily be reflected in the ICE Futures Canada market for canola, as the U.S. is expecting to produce a record large soybean crop this year.

But, Prairie basis levels will likely improve, as they will need to ration demand as we move into the last quarter of 2014/15, Burnett said.

There have been rumblings of quality problems for many Canadian crops this year, due to large untimely amounts of rainfall in a lot of places. But, overall the canola crop quality is average with a bit of a higher protein meal and lower oil content than a year ago.

Burnett said the better meal content is good for canola this year, as a recent rally in North American oilseeds is linked to strength in soymeal. But, in the long term he is neither bearish, nor bullish on canola.